States Acting to Protect Buyers of Seller-Financed Homes
In Ohio, Michele Lepore-Hagan, a Democratic state representative from Youngstown, introduced a bill on Tuesday
that would require property owners to solve any housing code violations and pay outstanding fines before selling the homes to buyers in contract-for-deed transactions or in similarly structured rent-to-own leases.
Sales of rundown homes on long-term installment contracts — sometimes called contracts for deeds or land contracts —
to people who could not qualify for a traditional mortgage are surging in several states, especially in the Midwest.
Legislators in three Midwestern states are taking steps to protect consumers who buy cheap
and often rundown homes from investors through seller-financed deals or rent-to-own leases.
Nonetheless, the deals have made a comeback over the past decade
because the housing crisis created a ready supply of foreclosed homes for speculators and investment firms to buy and then resell.
The legislative initiatives in Ohio, Illinois and Michigan come as the Consumer Financial Protection Bureau
continues to investigate the activities of some of the larger firms in the seller-financing home business.